I have installed latest OEG release (11.1.1.6) and OES 11.1.1.5, followed the instructions in the OEG and OES integration guide to create a policy that delegates authorization to OES through OES 11g Authorization filter.
Before testing the OEG policy, I created a OES11g authorization policy on OES Admin Server, and used a simple Java application to invoke authorization decisions successfully. But when testing the OEG policy from Service Explorer, I got the an error, and below is the trace stack:

Can you make sure that you are running with the latest OES client installation and patches on the machine running OEG.
I have seen this error before and it required a patch to OES client to support strong crypto.

I have also applied the patch 12917515 to OES (both server and client). This patch contains 2 sub-folders [APM and OES]. I have installed the OES sub-folder patch only.

Steps: I followed the steps as mentioned in OEG-OES 11g integration guide: http://www.oracle.com/technetwork/middleware/id-mgmt/oes11g-integration-guide-1520074.pdf

Note: Instead of using a HTTP Basic filter, I set the "authentication.subject.id" attribute manually and then call "OES 11g Authorization" filter.

Issue,
The following exception is thrown when the authorization filter runs,

java exception running circuit: java.lang.RuntimeException: oracle.security.jps.service.policystore.PolicyStoreException: JPS-10619: Failed to initialize cipher for local cache encryption/decryption. at oracle.security.jps.az.internal.runtime.encryption.CipherServiceFactory.getService(CipherServiceFactory.java:61) at oracle.security.jps.az.internal.runtime.pd.receiver.UpdatePolicySet.initCipherService(UpdatePolicySet.java:211) at oracle.security.jps.az.internal.runtime.pd.receiver.UpdatePolicySet.<init>(UpdatePolicySet.java:139) at oracle.security.jps.az.internal.runtime.service.PDPServiceImpl.initializeControlledPD(PDPServiceImpl.java:296) at oracle.security.jps.az.internal.runtime.service.PDPServiceImpl.initial(PDPServiceImpl.java:368) at oracle.security.jps.az.internal.runtime.service.PDPServiceImpl.<init>(PDPServiceImpl.java:268) at oracle.security.jps.az.internal.runtime.provider.PDPServiceProvider.getInstance(PDPServiceProvider.java:89) at oracle.security.jps.internal.core.runtime.ContextFactoryImpl.findServiceInstance(ContextFactoryImpl.java:139) at oracle.security.jps.internal.core.runtime.ContextFactoryImpl.getContext(ContextFactoryImpl.java:170) at oracle.security.jps.internal.core.runtime.ContextFactoryImpl.getContext(ContextFactoryImpl.java:191) at oracle.security.jps.internal.core.runtime.JpsContextFactoryImpl.getContext(JpsContextFactoryImpl.java:132) at oracle.security.jps.internal.core.runtime.JpsContextFactoryImpl.getContext(JpsContextFactoryImpl.java:159) at oracle.security.jps.internal.core.runtime.JpsContextFactoryImpl.getContext(JpsContextFactoryImpl.java:165) at oracle.security.jps.openaz.pep.PepRequestFactoryImpl.<init>(PepRequestFactoryImpl.java:123) at oracle.security.jps.openaz.pep.PepRequestFactoryImpl.getPepRequestFactory(PepRequestFactoryImpl.java:113) at com.vordel.circuit.oracle.oeseleveng.OES11GAuthZProcessor.invoke(OES11GAuthZProcessor.java:76) at com.vordel.circuit.InvocationEngine.invokeFilter(InvocationEngine.java:154) at com.vordel.circuit.InvocationEngine.invokeCircuit(InvocationEngine.java:43) at com.vordel.circuit.InvocationEngine.processMessage(InvocationEngine.java:229) at com.vordel.circuit.SyntheticCircuitChainProcessor.invoke(SyntheticCircuitChainProcessor.java:36) at com.vordel.dwe.http.HTTPPlugin.invokeDispose(HTTPPlugin.java:290) at com.vordel.dwe.http.HTTPPlugin.invoke(HTTPPlugin.java:131) Caused by: oracle.security.jps.service.policystore.PolicyStoreException: JPS-10619: Failed to initialize cipher for local cache encryption/decryption. at oracle.security.jps.az.internal.runtime.encryption.AESCipherImpl.retrieveRawKey(AESCipherImpl.java:140) at oracle.security.jps.az.internal.runtime.encryption.AESCipherImpl.getKey(AESCipherImpl.java:184) at oracle.security.jps.az.internal.runtime.encryption.AESCipherImpl.<init>(AESCipherImpl.java:87) at oracle.security.jps.az.internal.runtime.encryption.CipherServiceFactory.getService(CipherServiceFactory.java:59) ... 21 more

Is there any other patch required to make OEG work with OES 11g ? How to resolve this error ?
Any help will be greatly appreciated.

For the time being, OES11g/OEG11g integration requires some patches to be applied.
On retriever some integration, installation guides have been posted with the patches.
There is also a VirtualBox image ready to be used to work with or to demonstrate this integration.
<internal URL removed>

As Patrice has mentioned, a recently released OES 11g patch towards strong crypto support is missing in your environment. It should be available as an OES patch this week, if it's not already there (*REDACTED* is an oracle internal link). Please get in touch with your Oracle point of contact (or drop me a note - sid.mishra@oracle.com), for the same.